In order to get the maximum State Pension you need to have paid National Insurance premiums (or received credits when raising children, for example) for a certain number of years. The new State Pension which came into force in April 2016 requires 35 years of National Insurance credits. Those who have had years credited from before 2016 will need to consult HMRC to find out what is required for them. Where there is a shortfall it is possible in some cases to make additional payments which will increase what will be received at State Pension Age. The changes in the State Pension Age has also affected the requirements. This can be of particular relevance to low earners generally, and women who have had breaks in their employment record. Recently we had two women clients who only found out that they were falling short of their National Insurance requirements because they consulted HMRC. By making these additional payments they were able to substantially increase the State Pension they will receive. One found it successful to consult www.gov.uk/personal-tax-account. We also suggest using the State Pension Forecast site – www.nidirect.gov.uk/articles/check-your-state-pension.
Note: Some good news about State Pensions – they have a guaranteed increase of 3.9% from April 2020. Under current rules the State Pension is increased by what is called the “triple lock”, which is the highest of the three indices – earnings growth, price inflation or 2.5% per annum.
Monday 16 March 2020
Wednesday 11 March 2020
GETTING OLDER
It happens. It is a bit hard to avoid! A useful checklist for putting matters in order along the way could be as follows:
1. Get a Will made, if you have not already done so. Dying without a will leaves a problem for those left behind. If the will was made more than 5 or 10 years ago, review it.
2. Get a Lasting Power of Attorney done. Most people have had the experience with a family member or friend where they reached a point where they could not deal confidently with key decisions regarding their health or finances and would benefit from help from someone they can trust. The Lasting Power of Attorney (LPA) puts an arrangement in place so that the named person or persons can act on their behalf.
3. If you are single and your possessions, including your property, are worth in excess of £325,000, or if you are married and the value of your joint estate exceeds £650,000, find out how Inheritance Tax affects you and see if there are some simple actions you can take to minimise or avoid gifting Inland Revenue 40% of part of your estate.
1. Get a Will made, if you have not already done so. Dying without a will leaves a problem for those left behind. If the will was made more than 5 or 10 years ago, review it.
2. Get a Lasting Power of Attorney done. Most people have had the experience with a family member or friend where they reached a point where they could not deal confidently with key decisions regarding their health or finances and would benefit from help from someone they can trust. The Lasting Power of Attorney (LPA) puts an arrangement in place so that the named person or persons can act on their behalf.
3. If you are single and your possessions, including your property, are worth in excess of £325,000, or if you are married and the value of your joint estate exceeds £650,000, find out how Inheritance Tax affects you and see if there are some simple actions you can take to minimise or avoid gifting Inland Revenue 40% of part of your estate.
Thursday 5 March 2020
PASSING PENSIONS DOWN THE GENERATIONS
Having sent that letter to nominate your beneficiaries, it is worth looking further at the range of options that may be available with the new Flexi-Access Drawdown Pension schemes (and older style pensions can be transferred to the new Flexi-Access pensions) which provide more choices of how you can choose to pass the money on when you die. The majority of older pensions will simply pay out a lump sum to the named beneficiary(s). This lump sum is tax-free if the person concerned is younger than 75 when he dies. If they are 75 or over when they pass away, the lump sum is taxed as if the beneficiary had earned it as income. This can result in a substantial tax charge.
If your pension is a new style Flexi-Access Drawdown, or if you transfer your existing pension to one, you can nominate anyone you want as a beneficiary, regardless of whether they are family or not. It is also possible to pass the pension, or part of it, to a beneficiary as a pension, as opposed to just a cash lump sum. Thus a person could pass his pension as a pension to a child or even grandchild and the child or grandchild would be able to access it immediately regardless of their age. And the pension benefit could be passed down the generations even further.
This opportunity won’t be of use to everyone, but it can have substantial income tax and inheritance
tax benefits so it is important to know what your options are. If you have a question on this, please
contact your pension provider or contact us.
If your pension is a new style Flexi-Access Drawdown, or if you transfer your existing pension to one, you can nominate anyone you want as a beneficiary, regardless of whether they are family or not. It is also possible to pass the pension, or part of it, to a beneficiary as a pension, as opposed to just a cash lump sum. Thus a person could pass his pension as a pension to a child or even grandchild and the child or grandchild would be able to access it immediately regardless of their age. And the pension benefit could be passed down the generations even further.
This opportunity won’t be of use to everyone, but it can have substantial income tax and inheritance
tax benefits so it is important to know what your options are. If you have a question on this, please
contact your pension provider or contact us.
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